The Senate narrowly passed the One Big Beautiful Bill on July 1, 2025, with Vice President J.D. Vance casting his vote to break the 50-50 tie. The final vote came after lawmakers worked through the weekend, voting on nearly 50 separate amendments, ending a 27-hour session where Republican leaders fought to win over essential holdouts (Alaska Sen. Lisa Murkowski being the crucial flipped vote), trying to meet Trump’s July 4 deadline. Importantly, all of the changes made by the Senate Finance Committee related to LIHTC and OZs were incorporated in the Senate’s final version, as we previously outlined here. The critical Housing Credit provisions included in the Senate’s bill are:

• Housing Credit allocation increase: The bill would provide a permanent 12% allocation increase beginning in 2026.   
• Bond test threshold reduction: The 50 percent bond financing threshold test would be lowered to 25 percent permanently, effective for properties placed in service starting after Dec. 31, 2025, if there are bonds of at least 5 percent of the basis in land and building with an “issue date” after Dec. 31, 2025.
• AMI Threshold Reduced to 70%: The Senate version lowers the area median income (AMI) eligibility threshold from the current 80% to 70% of area or statewide median income.
• Effective Date of New OZ Cycle: The bill calls for a 10-year designation cycle, with states beginning new zone nominations on July 1, 2026, and new designated zones becoming effective on Jan. 1, 2027.

According to the Joint Committee on Taxation, the Housing Credit provisions in the Senate bill represent a $15.7 billion investment in the Housing Credit—the largest in decades. Analysis from Novogradac estimates this investment would finance the production of 1.22 million additional affordable homes over the next decade. 

The legislation now returns to the House of Representatives, where leadership must overcome internal GOP resistance, particularly over concerns regarding the deficit, SALT changes, and Medicaid cuts. House leadership has three options: 1) vote on the Senate version as-is, 2) propose changes / amend the bill, and 3) take no immediate action, stalling the bill until the Speaker brings it back up for debate. If the House votes on the bill as is and the vote passes, the bill will be sent to President Trump to sign into law. If the House amends the bill, a conference committee comprising House and Senate conferees will be appointed to negotiate a final, unified version. That compromise bill, known as a conference report, must then be approved by both chambers in an up-or-down vote, with no further amendments permitted, before reaching the President’s desk. While House leadership may attempt to fast-track the Senate version without changes to meet the July 4 deadline, this path remains uncertain due to internal party divisions. Should the House reject the Senate bill or delay action, the timeline could slip into mid–July or beyond.

While the Senate’s Housing Credit provisions remain intact for now, the Nelson Mullins team will continue to monitor and report on legislative developments as they occur.

This article was written with assistance of summer associate Ben Smith.